Update 06/26/2025 Pt.1: Mortgage Rates Dip, Housing Market Shifts & Inventory Surges

Mortgage rates just dropped below 6.8% 📉 and summer housing momentum is heating up 🔥. In this episode of The Pulse and Perspective, Peter D’Angelo breaks down what the latest rate changes, borrower activity, and surging inventory mean for buyers, sellers, and the broader real estate market.

We unpack the newest data from the Mortgage Bankers Association and the National Association of Realtors, exploring regional trends, affordability shifts, and why stable—not necessarily low—rates are key for long-term growth. Plus, a surprising dip in new construction permits and what that signals for the months ahead 🏘️.

Whether you're house hunting, refinancing, or just watching the market, this is one not to miss!

#MortgageRates #HousingMarket #HomeSales #RealEstateNews #MarketUpdate #RefinanceTips #SummerHousing #HousingInventory #MortgageTrends #ThePulseAndPerspective

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Peter D'Angelo | NMLS: 885309 | Branch Manager | Guaranteed Rate, Inc., NMLS 2611
Peter.DAngelo@Rate.com

*All information, topics, discussion is my own personal opinion and insight, not reflective of Guaranteed Rate, Inc. May contain market information for informational purposes only, not to be used as financial advice.

Transcript

Podcast_06.26.2025 Update.Pt1

 [00:00:00] Welcome back to the Pulse and Perspective with me, Pete D'Angelo. I hope you're doing well. I did take a week off and my timing could not have been better because there's so much that happened in the two weeks since we last delivered our update. So today you're gonna get part one tomorrow. You'll get part two for our radio free Montclair listeners.

You get it all in one dose Friday morning. So here we go. We're about to catch up on quite a bit. That has moved the market shifted things, and now we also have some evidence of some shifts. So what are we going to be looking at today in particular? First we're gonna be looking at the housing market.

We're gonna take a look at the mortgage interest rates, what seems to be transpiring there, and giving us a look at what's going to happen. And also the second part, I'll give you a little teaser, we're gonna talk [00:01:00] more about the inflation bottleneck.

And I think a very good argument that could be made right now that we're not going to see inflation improve until the Fed actually lowers their interest rate. And I'm feeling more and more confident about that as time is going on, but I'm saving that for the second part. So starting off today, we're gonna talk about mortgage rates.

The borrow were trends that seem to be developing now. And then the existing home sales data that was released, we got the Meg existing home sales data from the National Association of Realtors. So we're gonna take a look at some of that information as well. How are we doing?

Well, we're doing good. We're doing the best that we've seen in quite a while. Mortgage rates on average now have dipped below the 6.8% mark, which is quite a bit of improvement. They've been staying range bound. They haven't been shifting around a whole ton, but this improvement down below 6.8%, and it depends.

There's variety. In the survey of interest rates [00:02:00] across different lenders right now, but for the most part, the average I think is at 6.8100000000000005% with a lot of lenders still quoting below that. This is showing quite a bit of significant improvement compared to 6.95% from the week prior. But the good news here is the volatility is remaining a little bit lower.

And that's going to create stability. When we have stability, we have better interest rates for the most part. It's not so much about having lower interest rates, it's just about having stable rates so that people's budget can be managed accordingly, and the real estate market could progress in a way that has actual regular rhythm to it.

When the mortgage rates fluctuate, buyers get in and out of the market. So as they stabilize buyers stay in the market. More on that later. For historical context here with mortgage interest rates, they're still elevated compared to that three to 4% range that we saw, you know, [00:03:00] pre pandemic, but we talked about this before.

That is unrealistic to expect. That was indirect response of an extraordinary time in our economy and in our nation's history. So that three to 4% range. I kind of throw out the value of that reference point. What we have is looking since the pandemic to now a little bit lower, you know, lower range than we've seen in recent months, at least how 2025 started off.

So this is good timing because this is the squarely the summer market now we're entering and the summer market is the, not just temperature hot, but also very hot for purposes of real estate transactions. This lower interest rate environment, even by a little bit, is that little bit more value. So if you are a prospective home buyer or someone who's been shopping and you've missed out on that property because of maybe $10,000 on your offer, or [00:04:00] $15,000, whatever it may be.

Little improvement in interest rates could help you to actually meet your monthly budget goals and afford that home in a competitive way. So opportunities knocking. I've been saying that for a few weeks now. This is proof positive and it's right there in the interest rates for us. What does the borrower activity look like though?

Actually from the data from the Mortgage Bankers Association, the survey through June 20th showed that the overall applications rose 1.1% week over week, and that's seasonally adjusted, but that's showing improvement because there was a little bit of a withdrawal of activity on the mortgage applications.

Why is that important? If you're a real estate professional or prospective home buyer, that means more competition possibly coming into the marketplace. Refinance applications did jump up a little bit. People who have rates locked above 7%, the difference between 6.9 and 6.8 could mean, you know, [00:05:00] with a stable market, you could buy down your interest rate and get an even lower rate.

So when you see the average going down to 6.8, maybe you have access to lower interest rates where there's even more cost savings. So that resulted in a 3% bump up in refinance applications. That's good. People are able to save some money that way. Purchase applications fell 0.4% reflecting still, you know, affordability constraints, um, which is a concern that a lot of people have if they have concerns about their job, potential job loss, or potential life changes that.

While things are very uncertain, could make people withdraw, so that's understandable. The average contract rate for a 30 year fixed rate mortgage ticked up to 6.88%, and this was going back last week. When we're quoting the average mortgage rates being offered, those are the average mortgage rates currently being offered.

When we are looking at the applications with locked in and offered [00:06:00] interest rates, that means, they're further along in the process and maybe they're purchasing that data gets reflected later. So we're looking back a little bit, so we're seeing improvement. The average purchase loan.

Dropped to $436,300, so that's the lowest since January of 2025. That could be indicative of people generating more savings and putting more down payment could be an indication that in the marketplace right now, more people are. Downsizing and putting extra money toward the new home.

So that pushed our average loan size down. 

Once we start seeing the average mortgage rate for 30 years fixed, going to those points, that's gonna incite some demand for refinance activity

Moving along to our existing home sale market review. Let's take a look at the sales and inventory from the National Association of Realtors may report. This is what we look at every month. I normally do a separate episode. We're just gonna bake it in and hit the key points. There's a lot [00:07:00] that's shifting and I think it's better to have the higher level view to see the patterns that are developing here.

So in May, existing home sales, they rose 0.8% month over month to 4.03. Seasonally, annually adjusted rate, that remains 0.7% below May of 20, 24 levels. So a little bit lower when we're looking year over year. But the inventory searched so the amount of homes that are available went up 6.2% from April to one point.

Five, 4 million units. That's equating to 4.6 per month supply, and that's the highest level since June of 2020. This means that the market is squarely moving into a more balanced market. In some markets, it is squarely a buyer'ss market. Now we've reached that point. We're looking at national figures here, national trends.[00:08:00] 

When we're talking about New Jersey, where I'm situated in the northeast, different story here. Still pretty competitive though. There is softening happening. The pricing component for this, the median existing home sales price for May of 2025 recorded $422,800. That's up 1.3% year over year. But the growth is slowing.

Uh, from 2024 is four to 5, 6, 4 to 5% pace, which is good news. If we see softening in home value appreciation, that's better than home values. Continuing to appreciate at crazy rates. And then we see a big correction where home values drop a lot. Now, I don't know what kind of environment.

Would precipitate that. But what I do know is just the balance of the market and historically how these things [00:09:00] go. Quick shoots up normally are followed by quick drops, down what level that is, remains to be seen. So this is good. We're seeing at least a softening of the annual pace of price appreciation.

The price pressures in certain markets, though, like I just mentioned about New Jersey, they're still persisting. It's still very competitive in markets. In the New York metro area, Chicago, Boston, those metro areas still are very competitive. We look at the rest of the country though, you're bidding, you're negotiating again.

So there's a different picture throughout the whole country. I. Then the certain markets, the regional trends, let's actually delve into that. The Northeast, we'll start there, that saw 4.2% sales growth driven by the job centers of Boston in New York, primarily in Philadelphia. In the Midwest we saw [00:10:00] 2.1%, home price appreciation that showed there's a little bit more affordability happening there in the south, led by the Sunbelt here.

Think. Beginning of summer, second homes, people wanting to downsize and go to their retirement spot. Now maybe the time for that move while the Sun and Sunbelt in the south saw 1.7% price appreciation. And the highlight cities there are Atlanta and Charlotte. And in the West, that's where we see the SAG 5.4% drop.

And price appreciation. And the high cost markets like San Francisco and Seattle are seeing the reduced demand. So as the growth changes throughout these different markets, we're gonna see a interesting picture. Painted for us at the national level, we always have to stay focused on our local market, though the dynamics now are fractured throughout the country.

So whatever's happening in your neighborhood is going to take precedence over these types of [00:11:00] data. But sometimes this data's good to know because it could be telling you where things could shift to in the near or distant future. With that said, there's also the element of new construction, which obviously inventory's been the problem.

Some would say, well, then we need to build more. Some would say, well, we could build more, or we can just create an environment where there's gonna be more inventory available. So we're gonna talk about the building side of things. Housing starts and permits May. Housing starts fell 9.8% month over month to 1.256 million seasonally and annually adjusted rate the lowest since June of 2020.

Notice the same dynamic happened here. Home inventory for existing homes has reached our peak that we've seen since June of 2020. Now our. [00:12:00] Building construction, new permits that has dropped to the lowest point since June of 2020. This is a combination of, in other markets, a market slowdown, so you're not getting as much bang for your buck on the new construction.

New construction builds, and then in the markets that are super hot, there's really not room to build. So new construction is an interesting element of this market. We're seeing that it's working exactly. Conversely to how the. Existing home sales information is being presented to us. Uh, I think that when we look year over year, the starts are down 12.4%.

This is akin to what we saw right after 2008, but this is a very different market. You're gonna probably hear in the news people talking about that comparison. My opinion almost, not even worth talking about because this market's so very different and it's a way different environment than 2008.

So [00:13:00] summarizing that, new construction bills are starting to see a big slowdown when we compare year over year. It does make sense. There are certain pockets where it's still, you know, more appealing to builders. But for the most part, I think that the increase in the amount of. Sellers now throughout the whole country and this new balancing in the market, people need to see how this is going to actually play out.

I give a huge credit. I'm gonna take a moment as we're wrapping up part one of today's episode. I wanna give huge credit to the real estate professionals out there who have been staying consistent for their, the families and the clients that they serve over the past few years. Because as we've talked about week in, week out, how much these markets change, how much there's volatility, and the interest rates and the affordability 

We rewind like six months ago. We were talking about [00:14:00] how, how to navigate being the absolute most competitive buyer that you can be in this marketplace and now. You still wanna be the most competitive buyer, but that looks so different and the real estate professionals out there have had to manage that and also manage pricing.

How do you price when the numbers fly up and down and super volatile? When you look at certain markets that get really, really hot when a shift like this happens, this is tenuous. This is a very delicate thing to manage 'cause you have to manage a client's expectation who sees nothing. But in the news right now.

You see nothing but home values keep going up. And then as soon as you hear that home values are going down, that's when people get off the fence and they're like, no, let me sell my house. Now, maybe that ship sailed. That could be the environment we're in in certain markets in the country right now. So if you've been in contact now, this is general message.

If you've been in contact with a real estate professional and they've reached out to you [00:15:00] about potentially buying or listing your home. Have a conversation because now is a good time to get those ducks in a row, because the opportunity may not be as lucrative as we move forward. Um, I. I am going to leave it there for today.

We're gonna get episode two out tomorrow for our radio free Montclair listeners, you're getting both episodes right now, but if there's anything that you'd like me to highlight or anything you'd like me to deep dive into beyond what was shared today, please feel free to reach out. Otherwise, make it a great day today and I look forward to catching up with you again tomorrow.

Take good care.